al darby wants to withdraw $20,000 (including principal) from an investment fund at the end of each year for five years. how should he compute his required initial investment at the beginning of the first year if the fund earns 10% compounded annually?

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04-11-2022
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al darby wants to withdraw $20,000 (including principal) from an investment fund at the end of each year for five years. how should he compute his required initial investment at the beginning of the first year if the fund earns 10% compounded annually?

Answer :

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rafikiedu08 rafikiedu08 · Answer 1 · 2022-11-08T02:32:30-05:00

Times the current value of a $20,000 is 5-year, 11% annual ordinary annuity.

The following data was taken into account while calculating the necessary initial investment.

Amount withdrew: $20,000

Duration: 5 years

Interest rate is 10%.

Using mathematics,

= Amount withdrew * 5-year, 10% regular annuity's present value of 1.

An annuity is a series of regular payments made in the investment world. Regular contributions to a savings account, regular mortgage payments, regular insurance payments, and pension payments are all examples of annuities. The periodicity of payment dates can be used to categorise annuities.

The deposits (payments) may be made on a weekly, monthly, quarterly, annual, or any other regular basis. 'Annuity functions' are mathematical operations that can be used to calculate annuities.

To know more about Annuity payments visit:

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